Could Apple Pay Be A Game Changer For The Channel?

Apple’s upcoming contactless payment technology Apple Pay could be a game changer for the channel, according to solution providers and ScanSource, a major distributor of point-of-sale products, barcode communications and physical security solutions.

Paul Constantine, president of ScanSource POS and Barcode, said Apple Pay -- to be released for iPhone 6 and iPhone 6 Plus starting in October -- presents new opportunities for solution providers.

’The rapid rise adoption of smartphones at the consumer level has led to a lot of demand for mobile applications, both in retail and also in other types of mobile applications,’ Constantine said. ’…It’s here, and you can argue about how pervasive it may become, … but I think it’s here to stay and I think it’s going to be a technology I think a lot of consumers will enjoy using.’

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The new Apple Pay platform will support near field communication (NFC) payments for newer iPhones and Apple Watch, with security through Touch ID, Apple’s fingerprint sensor. A device can be tapped to a retailer’s point-of-sale terminal and a credit card or debit card number will be instantly registered for purchase.

Apple said in a press release this month it will make the platform available for iPhone 5 models as well. It will be available through American Express, Mastercard and Visa through the most popular banks. Leading retailers set to support the development include McDonald’s, Macy’s, Staples, Bloomingdale’s and Whole Foods Market.

Constantine explained this is a shot in the arm for NFC technology, which has been around for some time though not wholly-embraced. With excitement growing around Apple Pay, he said solution providers can upgrade to offer not only point-of-sale technology compatible with NFC, but also coincide that with the adoption of EMV chip technology, a growing global security standard named after its original developers Europay, Mastercard and Visa. Now’s the time, he said, considering retailers that don’t accept EMV cards or chip-and-PIN cards will have liability from credit card companies shifted onto them beginning in late 2015.

’There are lots of companies that have been trying to leverage NFC as a way to communicate payment information into the POS system and out to the payment solutions provider, but none of these solutions have achieved critical mass,’ he said. ’The interesting thing about Apple Pay, to us, is we think it will help NFC technology gain critical mass. It’s coming out at a good time (with the oncoming EMV migration).’

Constantine said ScanSource anticipates in the next six months the amount of in-person EMV card readers will accelerate due to Apple Pay.

Jerry Zigmont, owner of MacWorks, an Apple consultant based in Madison, Conn., said though his group is not specifically focused on point-of-sale at this time, this technology could be a winner for many VARs.

’Time will tell,’ Zigmont said. ’If you go into some of these bigger department stores or point-of-sale locations and people have their phones and are inquiring, … (the merchants) would get quickly on board with it. … In terms of the consumers, I think it’s a real win. In terms of Apple, I think this probably presents a huge revenue stream.’

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Steven Kantorowitz, president of CelPro Associates, a New York-based Apple partner, said if Apple Pay works as smoothly as the company has claimed, it will be an assured ’game changer’ in the channel.

’This has basically been out there but Apple usually takes a solution that’s been out there and brings it to the population that loves Apple products so it explodes,’ he said.

Solution providers contacted by CRN expressed little concern for security features with Apple Pay. The national company said the system is most secure because credit or debit card numbers won’t be stored or kept on file. There’s opportunities if a user’s phone is stolen to access the ’Find My iPhone’ app and clear the data, too.

Robby Hill, founder and CEO of Florence, S.C.-based solution provider HillSouth, said with that in mind, retailers who ignore NFC pay will be ’left behind in the dust’ of their competitors.

’With card breaches from storing PIN numbers becoming more common, we see the adoption of contactless payments as a great way to help secure the retail environment from future attacks,’ Hill said.

Zigmont pointed out the modern-day transaction of handing your credit card over to a server following dinner in a restaurant to pay and tip isn’t secure -- this would eliminate that risk.

’There’s so many inherent flaws in that,’ he said. ’If [your Apple phone now] gets stolen, your credit card doesn’t need to be canceled. You simply report the phone missing and you can do it remotely.’

Sean Connors, president of POS Prophet Systems, which sells point-of-sale products in the golf industry in Springdale, Penn., said though the Apple Pay launch has features of some interest to his customer base, he’s weary to call the boost to business too soon.

’I will not be convinced that it is a game-changer until we allow the issue to unravel in the real world,’ he wrote in an email to CRN. ’…Ultimately, the consumer is driving the payments bus.’

Connors noted the consumers’ lack of interest led to the lack of success with Google Wallet and the Isis Wallet application, which is now undergoing a rebrand to distance itself from the terrorist group Islamic State of Iraq and Syria, which is commonly referred to as ISIS.

PUBLISHED SEPT. 17, 2014